Most of the major listed real estate companies have just published their annual results. These results are closely scrutinized by real estate industry players, as listed companies are often the best indicators of changing market conditions.
Even though financial presentations are always a glass-half-full exercise. Even though the sheer number of players in the industry shows just how heterogeneous the real estate sector can be.
What can we learn from the first published figures? A common theme is emerging: the inflection of values. The low point seems to have been reached, at least for core assets, thanks to the fall in interest rates.
It has to be said that the correction has been massive. A study by Natixis CIB of 24 listed real estate companies in Europe shows the extent of the damage. In just two years, office values have corrected by an average of 24%, with an interest rate effect of -37%. In logistics, the fall will have been 22%, -20% in residential, -15% in high-street retail and -14% in shopping centers, which had already been suffering from declining values for ten years.
The annual results of the leading Siic companies seem to indicate that the haemorrhage is over. Klépierre, Unibail-Rodamco-Westfield, Covivio and Gecina all reported a stabilization, or even a very slight recovery, in the value of their portfolios on a like-for-like basis. These values are confirmed above all by the transactions carried out. The first fruits of the interest-rate cut are being felt.
Let's be clear. Not all investors are created equal. Those positioned in sought-after sectors, such as logistics, hotels or prime office space, will benefit fully from the rebound in values. Those holding obsolete assets, or those on the verge of obsolescence, are stuck at the bottom of the pool. Market polarization is more relevant than ever.
"The sun is rising", says Covivio CEO Christophe Kullmann in an interview with Business Immo. It will rise all the faster for investors who know how to transform their real estate assets to adapt them to the new demand. For those who know how to operate their assets. For those who know how to control their debt or restore their equity.
For one thing is almost certain. If the sun is finally rising, it won't be shining on the entire real estate sector.